New York health system pays $15.6M to settle billing fraud case

LaGrangeville, N.Y.-based Health Quest Systems and certain of its subsidiaries have agreed to pay more than $14.7 million to the federal government and an additional $895,427 to the state of New York to resolve False Claims Act allegations, according to the Department of Justice.

As part of the settlement, Health Quest admitted submitting claims to government payers for evaluation and management services that were billed two levels higher than supported by the medical record. These false claims were submitted between April 1, 2009, and June 23, 2015. 

The health system also admitted submitting claims for home health services that lacked sufficient medical records to support the claims from April 2011 through August 2014.

Carmel, N.Y.-based Putnam Hospital Center, a subsidiary of Health Quest, admitted submitting false claims for services referred to the hospital by two orthopedic physicians from March 2014 through December 2014. The government claimed this arrangement violated Stark Law because the compensation provided to the two physicians allegedly exceeded fair market value for the services they provided. The government further alleged the purpose of the excessive compensation was to get the physicians to refer more patients to Putnam Hospital Center.

The allegations against Health Quest were originally brought in three lawsuits by former employees under the qui tam, or whistle-blower, provisions of the False Claims Act.

In addition to the monetary settlement, Health Quest entered into a corporate integrity agreement with HHS' Office of Inspector General.

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